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Yankees hit with $18M luxury tax, their lowest since 2003

NEW YORK, N.Y.—The New York Yankees lowered spending on players by US$12 million this year, cutting payroll by $5 million and slashing their major league-leading luxury tax by more than $7 million.

New York was hit with an $18 million luxury tax Tuesday by Major League Baseball. The tax was New York’s lowest since 2003 and down from $25.7 million last year, when the Yankees won the World Series.

“Atta baby. And right now we’re in the $170s,” Yankees general manager Brian Cashman said, looking ahead to his 2011 payroll.

Season-ending payroll information and the tax was sent to teams Tuesday and obtained by the Associated Press.

Boston is the only other team that will have to pay. The Red Sox, who missed the playoffs this year, exceeded the payroll threshold for the first time since 2007 and owe $1.49 million.

According to the collective bargaining agreement, the Yankees and Red Sox must send cheques to the commissioner’s office by Jan. 31.

Red Sox president Larry Lucchino declined to comment.

Since the current tax began in 2003, the Yankees have run up a bill of $192.2 million. The only other teams to pay are Boston ($15.34 million), Detroit ($1.3 million) and the Los Angeles Angels ($927,000).

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New York’s payroll was $215.1 million for the purpose of the luxury tax, down from $226.2 million, and the Yankees pay at a 40 per cent rate for the amount over the threshold, which rose from $162 million to $170 million. Boston’s luxury-tax payroll was $176.6 million, and the Red Sox pay at a 22.5 per cent rate.

“We’re doing a better job of managing our payroll and managing our decision-making as we enter the free-agent market,” Cashman said. “Our payroll doesn’t necessarily have to live at that level, but it’s nice to know that our owners are committed to allow us to get there if we need to.”

To compute the payroll, Major League Baseball uses the average annual values of contracts for players on 40-man rosters and adds benefits. The Yankees failed to land free-agent pitcher Cliff Lee despite being given permission from ownership to make a $150 million, seven-year offer. Lee agreed to a $120 million, five-year deal with Philadelphia.

“We weren’t going to exceed where we were this past year, but the bottom line is that now that the Lee thing has declared itself, it would be hard-pressed for us to get up to that level,” Cashman said.

While the Yankees are stocked with high-salaried veterans, Cashman has mixed in young players in recent years such as Phil Hughes, Joba Chamberlain and Brett Gardner.

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“You need a strong farm system that prevents you from being desperate in the free-agent market,” Cashman said. “You don’t want to be desperate in the free-agent market, because you’ll get slaughtered.”

New York’s payroll under the conventional method of calculation — salaries and prorated shares of signing bonuses — dropped from $222.5 million in 2008 to $220 million last year to $215.1 million this season.

Boston’s payroll rose by $30.2 million to $170.7 million. The $44.4 million between the Yankees and Red Sox was larger than the payrolls of San Diego ($43.7 million) and Pittsburgh ($44.1 million).

After moving into Target Field, Minnesota’s payroll also went up by $30 million, leaving the Twins 10th in the majors at $103 million. Cincinnati increased its payroll by $9.8 million to $82.5 million.

Florida raised its payroll by $9.8 million to $47.3 million after an agreement by the Marlins with the players’ association last January to increase spending. Florida moves into a new ballpark in 2012.

The Los Angeles Dodgers cut payroll by a major league-high $21.8 million to $109.8 million as owners Frank and Jamie McCourt argued in divorce proceedings. Houston dropped by $17.9 million to $90.1 million and the New York Mets by $14.7 million to $127.6 million. Cleveland cut $16.7 million to $60.5 million.

The Yankees, Phillies (third at $145.5 million), Twins and the World Series champion San Francisco Giants (11th at $101.4 million) were the only teams from the top half by payroll to make the playoffs.

AL champion Texas was 22nd at $74.3 million. Joining the Rangers in the post-season from the bottom half by spending were Atlanta (16th at $89.2 million), Cincinnati (19th) and Tampa Bay (20th at $77.5 million).

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Payroll figures are for 40-man rosters and include salaries and prorated shares of signing bonuses, earned incentive bonuses, non-cash compensation, buyouts of unexercised options and cash transactions, such as money included in trades. In some cases, parts of salaries that are deferred are discounted to reflect present-day values.

The commissioner’s office computed the average salary at $2,932,162, up 1.7 per cent from last year’s $2,882,336. The players’ association, which uses a slightly different method, pegged the average at $3,014,572 last week, up 0.6 per cent from $2,996,106.

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